Credit Suisse cuts Bharti Airtel to Underperform, stock falls over 4%

MUMBAI: Bharti Airtel’s stock fell over 4% in early trade after brokerage Credit Suisse downgraded it to Underperform, citing competitive fears once Mukesh Ambani-owned Reliance Jio Infocomm starts its 4G voice and data services likely later this year.

“The last time new competition came into the market (in 2009-10), Bharti's EBITDA stayed flat for three years (before recovering in FY14). RJio's launch network will be 3 times of 2009-10 in terms of capacity addition to the industry,” Credit Suisse analysts Sunil Tirumalai and Chunky Shah said in a note.

The brokerage has a price target of Rs 265 for India’s No. 1 mobile phone operator, whose stock was down 2.6% at Rs 345 on the Bombay Stock Exchange at 11 am. The broad Sensex was up 0.4%.

Against the competitive backdrop, the brokerage said that the “current consensus expectations of a 10-15% EBITDA CAGR over three years for Bharti and Idea are optimistic”.

Credit Suisse has Underperform ratings on No. 3 Idea Cellular with a stock price target of Rs 105 and No. 4 Reliance Communications, with a target of Rs 90.

Idea’s stock was down 1% at Rs 142.10 while shares in RCom were 1.3% lower at Rs 146.35.